Thursday, May 01, 2008

Solar electricity is about to get much cheaper, industry analysts predict, because a shortage of the silicon used in solar panels is almost over.

Solar power cost about $4 a watt in the early 2000s, but silicon shortages, which began in 2005, have pushed up prices to more than $4.80 per watt, according to Solarbuzz. Indeed, the growth in silicon production hasn't kept pace with the rise in solar power. The shortage has been severe enough to drive up silicon prices to more than 10 times normal levels, to $450 a kilogram, adds Ted Sullivan, an analyst at Lux Research.

While only 15,000 tons of silicon were available for use in solar cells in 2005, by 2010, this number could grow to 123,000 tons, Sullivan says. And that will allow existing and planned production of solar panels to ramp up, increasing supply. "What that means, practically, is that [solar] module prices are going to come down pretty dramatically in the next two or three years," Bradford says.

In a recent presentation, Bradford said that prices for solar panels could drop by as much as 50 percent from 2006 to 2010. In areas that get a lot of sun, that will translate to solar electricity costs of about 10 cents per kilowatt hour, matching the average price of electricity in the United States.